In conjunction with the strategic importance of this year’s initiative, the Spanish-based insurer invited eight journalists from eight different countries, to attend the presentation of its 2019 shareholders meeting in Madrid.

As a publication focused on the Massachusetts insurance industry, which happens to be MAPFRE’s largest marketplace within the U.S., Agency Checklists was invited to attend the meeting in Madrid as part of a three-day tour to learn more about the company and its mission.

MAPFRE’s 2019 Triennial Strategic Plan for the U.S.

MAPFRE CEO Antonio Huertas

At the end of 2017, MAPFRE, the largest auto and home insurer in Massachusetts made the somewhat surprising announcement of a restructuring of its U.S. operations. As part of that plan, MAPFRE also announced its decision to withdraw from five states into which it had expanded, as well as the sale of its Life business.

The decision to restructure its U.S. operations was a bold one, which naturally led many in the U.S. insurance industry to question what exactly the company’s plans for the U.S. market were.

If there was one main message made during the presentation of MAPFRE’s Strategic Triennial Plan for 2019-2021, however, it was the following: MAPFRE is not leaving Massachusetts, nor the U.S. marketplace, as evidenced by the slide shown during Mr. Huertas’ official presentation to its shareholders.

A look at the plans for MAPFRE’s U.S. operations

“The next three years are very important to us,” explained Alfredo Castelo, MAPFRE’s CEO of the North America Regional Area, during an interview with Agency Checklists just before the shareholders meeting. Mr. Castelo emphasized that the restructuring decision has allowed the U.S. operations now to align completely with the overall strategy of the group and the idea of transformation through both client and business profitability.

“We announced a very significant restructuring in 2017, and to be frank, if we look at it with perspective, I think we are very happy with what we have been able to achieve in 2018,” admitted Mr. Castelo, “Of course, there is always room for improvement in our results, but if you look at the underlying result of the company, we are seeing improvements.”

Turning to the insurer’s plan for the next three years, it will involve three main goals: “First and foremost, Massachusetts…,” he emphasized, then “The second one is to continue executing our plans to improve our profitability outside Massachusetts… And the third item refers to this transformation process, digital business and digital interaction with our customers.”

MAPFRE’s Business Strategy for North America from its 2019 Strategic Plan

Massachusetts

“Massachusetts…is our core state, and we have to make sure that we keep our leadership position, we keep showing very strong performance,” noted Mr. Castelo during the interview. Continued improvements and enhancements also will be an integral part of maintaining that leadership.

Overall, however, he is optimistic about MAPFRE’s future position in Massachusetts based upon last year’s results. “We are looking at $81 million pretax profit for our operation in Massachusetts with a combined ratio of 100%, despite the weather,” adding that, “…we are showing growth. Two percent growth in 2018.”

In particular, the company’s main priority has been personal auto in Massachusetts, where MAPFRE maintains its leadership position for Personal Lines and Commercial Lines Auto, as well as Homeowners. The company has seen pre-tax profits grow by $24 million, and for private passenger personal auto insurance alone, MAPFRE maintains a market share of nearly 25%.

Profitability outside of Massachusetts

MAPFRE’s second key initiative for improving and growing its U.S. operations overall concerns improving profitability in other key states aside from Massachusetts.

“I feel it’s important to mention for instance California,” said Mr. Castelo before continuing. “In California, we have seen a $15 million improvement. California is now a profitable state for MAPFRE.” He says if that result can be achieved in three other key states, this alone will transform MAPFRE’s financial results with respect to its operations within the U.S. marketplace.

“I’m referring to the State of Washington, Connecticut, and Florida,” explains Mr. Castelo. “These three states are among the fifth largest states for MAPFRE in the U.S., and it is very important that we are able to deliver better results there. So, we have established a number of initiative plans—because if we are able to see improvements in the results of these three states, the performance of MAPFRE is going to improve significantly.”

Digital transformation

“We have a new member to MAPFRE USA management committee…Jose Luis Bernal,” said Mr. Castelo explaining that this key appointment ties in with MAPFRE’s third goal for its U.S. operations, digital transformation.

Mr. Bernal was the former head of digital business at the group level, meaning he led all MAPFRE’s digital business worldwide. Mr. Bernal had joined the U.S. Team “… because of the strategic importance of the U.S.” With the addition of Mr. Bernal, Mr. Castelo has high expectations for what he will be able to achieve for MAPFRE stateside. “We thought that he could bring a lot of value to our U.S. operations, so he is going to be focusing on our digital business there.”

This digital transformation will take two main paths: The first to improve the company’s technology platforms and the second concerning its digital business initiatives, most notably its new Verti platform. A screenshot and link to the Verti homepage below.

A screenshot of the Verti website now live in Pennsylvania.

“We have to help our agents in this digital transformation process,” contends Mr. Castelo. “This is our priority…being able to help our agents, independent agents, our main partners in the digital transformation process.” This transformation will take form in the implementation of a new IT platform scheduled for launch in stages during 2019.

The first part of this implementation will take the form of a new front-end for MAPFRE’s independent agent partners. Mr. Castelo said that MAPFRE has been engaging with its agent partners during the development of this new platform in order to provide the best product possible. “This idea of ease of doing business, our agent partners being able to interact with us,” will be the key ingredients of the platform he added.

The second part of this digital transformation initiative involves the honing of MAPFRE’s online digital business. “When people think about digital business, they think about going direct, but it is not always the case,” he countered. Verti Spain, he said, was a case in point. “Just to give you an example, we have a subsidiary of MAPFRE in Spain. It’s called Verti,…40%, if not 50% of the new business is produced by our MAPFRE agents,” he notes, adding, “This is a product that they can offer to customers, customers that are looking for a different value proposition, more digitally-based.”

Verti is something that Mr. Castelo says that MAPFRE also wants to have in the U.S. They already have launched a version of it in the Commonwealth of Pennsylvania. Right now, the company is only offering auto business online. “We want to make sure that we fine-tune the business model…having everything properly done, just for us to see what our next steps should be in growing the digital business.”

When questioned whether he saw this as a replacement for MAPFRE’s independent agents, Mr. Castelo said absolutely not. He said their goal is to assist their independent agents with different segments of the population, especially through the digital channel. “As I said before, agents, as is the case in Spain—they need a different product because their customers have different needs—millennials, they have different needs—so we can offer our independent agents a different product for those customers.” Mr. Castelo emphasized, “And I think this is a very good strategy and we should be seeing some success in the next year.”

How MAPFRE’s U.S. operations fit in the overall scheme of things…

Alfredo Castelo, CEO of NORTH AMERICA Regional Area

While the United States continues to be the largest insurance marketplace in the world with approximately 30% of all premiums, it is only the third largest marketplace for MAPFRE, where it ranks as the 21st largest P&C insurer. As such, this marketplace remains an attractive one still full of untapped potential.

In comparison, MAPFRE is ranked as a top ten insurer in Europe, with Spain representing its largest marketplace. Outside of Europe, Brazil represents the second largest marketplace, then followed by the United States. Other markets where MAPFRE has a dominant presence include Puerto Rico, Turkey, Italy, and Peru.

The majority of MAPFRE’s profits come from Massachusetts, where it is ranked as the largest insurer in the Commonwealth for all three major lines of insurance: Auto, Home, and Commercial Lines. For example, it boasts nearly a 25% market share in private passenger personal auto insurance alone. In total, it has a presence in 14 states, with 2,700 employed throughout its offices in six states, and approximately 3,800 Agent and Broker partners.

Globally, however, it is a different story. Aside from being known as the “benchmark insurer in Spain,” MAPFRE’s reinsurance company, MAPFRE RE is the 16th largest in the world, while MAPFRE Asistencia, a warranty and service contract company, is the 4th largest such company in the world. In Central and South America, it is the number one non-life insurer and the third largest insurance group in Latin America. The company does business in more than 100 countries, with approximately 29 million clients.

So, while many may work with MAPFRE in Massachusetts, it is important to understand the global operations behind it. One can get a better sense of the talent, resources, and resilience that the insurer has to invest and improve its business here in the U.S. Based on what Agency Checklists saw and heard in Madrid, this appears to be exactly what it is planning to do.